* Forbes last month…

Illinois is set to implement a groundbreaking 0.2% transactional tax on cryptocurrency transfers, effective January 1, 2027, under its new Digital Asset Tax Act (SB3019). Unlike traditional capital gains taxes, this levy applies every time crypto is moved, irrespective of profit, even between a user’s own accounts or to a self-custodial wallet. Centralized exchanges serving Illinois customers will be responsible for collecting this tax, which could lead to double taxation on routine movements. Experts advise Illinois residents to minimize unnecessary transfers and maintain meticulous records before the law takes effect, as it establishes a unique precedent in crypto regulation.

Most crypto tax laws target what you earn. Illinois is targeting something different: the simple act of moving your own crypto from one place to another. Under Illinois SB3019, which adds a new “Digital Asset Tax Act” to state law, Illinois residents could owe a 0.2% tax every time they transfer crypto, regardless of whether they made a single dollar in profit. This is not a capital gains tax. It is a transactional tax.

The tax is projected to bring in $60 million.

* The Tribune today…

[T]he Chamber of Digital Commerce, an organization that says it represents more than 250 members of the global digital asset industry, filed a lawsuit Tuesday in Sangamon County Circuit Court seeking to block implementation of the new tax. The group argues the tax violates due process rights protected under the state and federal constitutions, along with state and federal provisions protecting interstate commerce and uniform taxation.

The Washington-based organization alleges in its 32-page complaint that the Illinois law imposes a tax on “economically identical property solely because ownership is recorded and transferred using blockchain technology,” the globally dispersed digital ledger.

The chamber argues that cryptocurrency and other digital assets differ from cash, stocks, bonds and other financial instruments only in the way they are exchanged, recorded and stored. Rather than taxing “a new kind of property,” the lawsuit contends, Illinois is taxing “an old kind of property recorded in a new way.” […]

In seeking to overturn the law, the chamber argues that it is riddled with vague definitions and that the Department of Revenue had yet to provide any regulations or guidance on issues such as “when blockchain operations constitute one or multiple taxable occurrences, or prescribing how customer location is to be determined.” For example, the lawsuit alleges, a single customer could be taxed multiple times for transferring the same asset among different digital wallets without the asset ever changing ownership.

Thoughts?